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New Polish Government May Opt Out Of EU Climate Deal

Ewa Krukowska, Bloomberg

Poland’s new government wants concessions going beyond what European leaders decided last year or it will seek an opt-out from the EU climate pact.

As Poland’s new government promises to be more assertive over everything from refugees to how to handle Russia, the first battle with Brussels is already looming and may prove to be just as divisive.

The Law & Justice party, which is on course for an unprecedented parliamentary majority, will fight for special treatment under the European Union climate pact, according to Konrad Szymanski, the likely next minister responsible for EU affairs.

As the continent’s largest producer of coal, Poland wants concessions going beyond what European leaders decided last year or it will seek an opt-out from the pact.

“I thought that migration is the most difficult issue in Europe but now it looks like it’s going to be climate policies,” Szymanski said in an interview in Warsaw two days before the Oct. 25 election. “With regard to migration, Europe is moving toward pragmatism. In climate, I can’t see an acceptable solution at this moment.”

The EU wants to be a leader in the global fight against climate change. Its 28 members agreed the bloc should cut greenhouse-gas emissions by at least 40 percent by the end of the next decade compared with 1990. Now in Poland it faces opposition from a government set to be led by the daughter of a miner and a party that promises to champion a coal industry that employs almost 100,000 people and is bleeding money.

UN Deal

The 2030 goal, which already includes some mechanisms to make emissions cuts less costly for countries in eastern Europe, is the EU’s contribution to a United Nations deal that envoys aim to seal at a conference in Paris in December.

The climate and energy pact for the next decade won unanimous support from EU leaders in October last year. The political deal was followed by a draft law proposed by the European Commission to accelerate the pace of carbon-dioxide reductions in the EU emissions trading system. In the first half of next year the commission is also due to put forward legislation on how to divide among member states the burden of pollution cuts outside the carbon market.

It all adds up to a burden for the Polish economy and should never have been signed by the outgoing Polish government, according to Szymanski. Polish sticking points include the proposed involvement of the European Investment Bank in selecting projects eligible for EU aid under a modernization fund and the planned rules on carbon efficiency standards.

“Even if those were amended, we still have a strategic problem because even with all the things in the box we are not in a position to compensate the Polish energy sector and industry for the losses they will have to bear,” Szymanski said. “The opt-out scenario on the table shows the level of the difficulty to find a solution.”

Rising Prices

Poland will not be able to foot the bill for emission reductions under the current plans, according to Law & Justice. EU allowances traded at 8.58 euros a metric ton on Monday on the ICE Futures Europe exchange in London and analysts’ predictions of it tripling in the next decade are “conservative,” Szymanski said.

“We will be seeking adequate compensation mechanisms,” he said. “We will uphold proposals that have already been floated by the Polish industry and utilities. We won’t stop at measures already proposed under the package; we’ll go beyond that.”

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